Public Comment

The banks in California deposit the state's tax revenue in the large private banks, which often invests these funds out of state. The earnings from these investments are not generally emitted to the State's treasury. This practice weakens the state economy, and deprives the public of an adequate budget for its various programs. This pattern characterizes how the big banks do their business in other states as well. 

There is one very important exception to the corporate oriented strategy, which is the North Dakota state bank (BND). Owned by the state's government, it is the only bank nationwide that is in the public domain. This year BND has been in business 100 years. In fact, the state legislature declared in a celebratory resolution February 19 as "Bank of North Dakota Day" . 

There are no other major banks in the United States that the public would want to celebrate. A few years ago Wells Fargo created 2 million phony accounts on behalf of its customers without their knowing it. They were then charged spurious fees. Wouldn't it have been appropriate to set aside one day each year to commemorate the bank's criminal conduct with a "Wells Fargo Criminal Conduct Day"? 

The contrast with BND and the large US banks is startling. From the bank's very beginning in 1919 the state was committed to the public good. Back then it attempted to defend its farmers whose interests were being compromised by business interests in the east. During the 1930s depression when many public schools around the country were unable to pay their teachers, they received instead warrants, which was a document of what they were owed. But in North Dakota, the BNS paid their teachers in full. The main reason that the state could afford its commitments and programs even in bad times is that the federal taxes collected must be deposited in the bank to serve the public interest and protect the state economy.  

Among BND's commitments have been to provide student loans on favorable terms. The bank makes these loans directly without any middle man soaking up some of the profits. In fact, the bank provided its residents in 1967 with the very first federal insured loans to students.  

Particularly important has been the willingness to allow students to refinance their loans without imposing any fees. So if interest rates drop, students could save thousands of dollars by refinancing their loans. Also, for students who have several loans, they can be consolidated to one loan. In this instance also there are no fees. 

Especially important, by working closely with the state's small banks, the large national banks have been discouraged from competing with these more vulnerable institutions. In fact, it is the official policy of BND to avoid competition with other banks. As a result, the services it provides directly to residents other than making student loans is very limited.  

A major limitation for state residents is that the bank on behalf of the small banks deliberately has only one branch, which is in the state capital. So although BND offers saving and checking accounts, it is not useful except for those living nearby. Moreover, the BND does not offer residents ATM cards, debit and credit cards, and online bill paying service. Obviously, the objective is to encourage residents to use local banks for these retail services. 

Since the 1930s depression there have been many cities, including Los Angeles, Oakland, Seattle, Santa Fe, and San Francisco that have attempted to establish a state owned bank. But none could overcome the opposition of big business financial interests.  

But there has been recently an important development. Inspired by the BND's commitment to serving the public interest and its success in keeping the large banks from invading the state and doing mischief, several communities in the bay area have persuaded some legislators to advocate Assembly Bill AB 857, which would allow local governments in the bay area to create their own version of BND to strengthen local financial institutions and keeping public money in the local community. According to the law, communities cannot set up their own banks. The objective of AB 857 is to use local taxes to prevent the mega banks from enjoying record profits by financing and enabling fossil fuels, private prison, destruction of communities, engaging in fracking and other reprehensible activities. 

Unlike the North Dakota bank, which is state owned, AB 857 would empower municipalities to charter their own public banks. Among the cities that so far have expressed an interest in local banks that are owned and operated by the community are Oakland, Richmond, Berkeley, San 

These banks would provide affordable loans and lines of credit to local businesses and nonprofits and would increase the lending capacity of the local banking system. Also, unlike the BND, retail bank services would be available. 

Local banking systems that are democratically operated would be good for the economy and quality of life of their residents. If you share this perspective, please contact the city council in your own community to urge that they endorse AB 857. Also the state legislature must be vigorously lobbied to vote for the proposed ordinance.  

The state's legislators and governor have a moral obligation to protect communities against the financials villains who exploit the various municipalities for their own advantage. This is not just a political issue. It is a deeply moral one.a